KHI News Service

Business groups testify on consequences of Obamacare

Economic impact not apparent yet, lawmakers told

By Phil Cauthon | January 17, 2013

Dan Murray, Kansas director of the National Federation of Independent Business (far right), and Eric Stafford, Senior Director of Government Affairs at the Kansas Chamber (far left).

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Spokesmen for three business groups testified today before the Senate Public Health and Welfare Committee about what state legislators might do — as one put it — to "mitigate the negative impact" of the federal health reform law on the Kansas economy.

The short answer: Not much.

"Ultimately, there's very little that the state can do now because of this massive overhaul at the federal level in terms of health care," said Eric Stafford of the Kansas Chamber. "We haven't seen significant direct economic impact yet, but you could argue that our economy is not growing to the level it could and maybe this health care law implemented on the national level is playing a part in that."

Extend tax breaks

One thing legislators could do, Stafford said, would be to give the same tax breaks businesses get for offering their workers insurance coverage to individuals who purchase their own health policies.

He said that would be important as more businesses stop offering group coverage.

"If individual policies become more popular, then both on the state and national levels we need to equalize tax treatment for persons who purchase individual policies," he said.

Sen. Jim Denning, R-Overland Park.

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Sen. Jim Denning, an Overland Park Republican, told fellow committee members that a bill like that was approved in a previous legislative session by the House Committee on Federal and State Affairs, but was never brought to the floor.

"Leadership was reluctant to bring it to the floor because it had a tax implication to it and we did not want to have any more tax debate. I understand that the bill's going to be reintroduced this year into tax committee on the House side," Denning said.

About 97,000 Kansans directly purchased insurance in 2010 and 2011, according to a recent report from the Kansas Health Institute. Another 245,000 were insured through small businesses with fewer than 50 employees. According to the report, about 101,000 of the Kansans covered through small employers would be eligible for federal tax credits, if their employers dropped coverage for them and the workers then purchased individual coverage through the insurance exchange each state is required to have by January 2014 under the Affordable Care Act, commonly referred to as Obamacare.

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Economic toll unclear

Dan Murray, Kansas director of the National Federation of Independent Business, told committee members that it was unclear what the economic toll of the health reform law would be on Kansas businesses.

"I'm certain it will factor into the economic decisions of small businesses," Murray said.

Because employers with 50 or more workers are required by the law to offer health insurance, many businesses may choose to stay below that threshold, he said.

"It gives a motive for that small business that's on the tipping point — 49 employees. Do they want to move over to 50 employees and have to comply with the employer mandate? Or it may mean that some of our small businesses in Kansas decide to move some of their full-time employees to part-time status. It may mean they...outsource some of their employees to private outsourcing firms," he said. "As this plays out, we'll see the economic impact."

Tom Byron of the Kansas Association of Insurance Agents also testified. He said insurance agents were unhappy with a provision of the law that prohibits them from serving as "navigators," as long as they are also selling health policies. Navigators under the new law are groups or individuals who help consumers understand the insurance exchanges and their different product offerings.

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